In September 2011, the President signed the America Invents Act (AIA) into law. With this new law, phased in over the past year and with key provisions fully in effect by March 2013, come a number of changes affecting how small business owners and inventors can via patent protect their important life blood – their inventions. It has raised differing opinions as to whether or not it helps or hurts small businesses and solo inventors.
According to the U.S. Department of Commerce, the resulting changes to the patent process are aimed to help small businesses by securing patent protection for inventions in a variety of ways, including establishing favorable legal provisions that speed the patent application process and enhance the quality review of patent applications.
Overall, this is a good thing. However – depending on the circumstances – some opponents believe the law actually could hurt the small business sector – particularly in the case of inventors who are slow with paperwork and filing. One notable objector, the National Small Business Association, a leading national small business advocacy organization, opposed the law, saying it places legal uncertainty over patent rights and takes away key legal provisions that small businesses and start-ups have used for many years.
Here's why: The new changes in the patent law eliminate the century-old “first-to-invent” system and replaces it with the “first-to-file” requirement, based on the current European model. The first inventor to file for a patent gets it. There is no longer a need to produce evidence that the inventor kept notes and careful documents of his or her “Eureka” moment, and then prove it in court. This is designed to cut down on litigation – a bonus for many companies.
However, small businesses that do not pay attention to the first-to-file race could miss out and lose their patent rights. It's definitely a proverbial, “you snooze, you lose,” scenario.
That's not to say the law is harmful, despite protests from its objectors. There are distinct advantages to the first-to-file scenario under the new law in that it prevents the long, extended lawsuits and potential bullying that can take place by larger companies with the resources to litigate against a small company for a long time over the smaller company's patent.
Consider the experience of small-time inventor Bob Kearns, who invented the intermittent windshield wiper. His case against the Ford Motor Company was made famous in the 2008 movie, “Flash of Genius,”starring Greg Kinnear. Kearns' case against Ford to protect his invention, his patent, his product, lasted years in the late 60s/early 70s, and cost him tens of thousands of dollars and, arguably, his marriage. He litigated about how Ford stole his idea and that case risked everything he stood for. Eventually (plot spoiler) he won, but it cost him dearly in his family, standing and treasure. But, he won, and he won big.
With the new law in place, vigilant small businesses avoid Kearns' situation and guard their products through prompt patent and trademark protection. The trademark is a registration of the business' brand concept in the form of a logo, or other symbol/writing. The patent requires an application be made to show the product is novel, non-obvious and is workable. In the case of written materials, copyright law also helps.
These same vigilant companies also can protect themselves with “assignments of inventorship”, confidentiality, non-disclosure and non-compete agreements. Also strict trade secret enforcement is also important.
The small businesses that cut corners to avoid the expense of licensing and non-compete agreements are the ones who likely will suffer under the changes to the patent law. Those that take on a consultant to help with a particular design without a trade secret agreement, confidentiality agreement, non-compete agreement or especially, an assignment of inventorship rights, then run the risk that a wily consultant might rush to the patent office and file a patent application --- and grab the patent before the actual inventor/small business.
Under the new law, there are some limited ways potentially to challenge that, but they involve much litigation and expense. The best and most inexpensive way is for the small business to protect products/work/research up front is by using the various intellectual property protections as noted above – before consultants ever start working on a development project.
Additionally, small businesses working toward developing an invention/product need to ensure a competitor/larger or even giant company doesn't file a pre-emptive patent application just to grab the patent. Secrecy is paramount. Remember the old adage, “Loose lips sink ships.”
On the whole, the new changes to patent rules under the AIA are good for small businesses that are willing to spend a little up front to protect their intellectual property BEFORE it is stolen or grabbed by another. In fact, if Bob Kearns had gone out today, and filed before Ford did, then much of that litigation would have been avoided – as he'd not be challenged on WHEN he first came up with the idea. Hollywood would have missed out on a movie, but Kearns could have saved time and money on lengthy, complicated litigation.

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